July 2, 2015
Authored by: Luke Lantta
We have looked at a number of chapters of the Wellin trust disputes in South Carolina and how they are shaping trust protector law. A recent district court opinion in one of the cases, McDevitt v. Wellin, digs a little deeper into the authority of the trust protector, namely if the trust protector had the authority to amend the procedure for his own removal. Not surprisingly, the opinion turned on the language used by the trustor in the trust when describing the trust protector’s powers.
The trust protector purported to amend the trust and to change the procedure for his own removal. It was argued that the amendment was invalid because, through the amendment, the trust protector was increasing his own power and this increase in power was impermissible under the trust instrument. The court turned to two provisions in the trust to answer the question of whether the amendment was valid:
[Section A.3] During [the trustor’s] lifetime, the Trust protector has the authority to amend the provisions of the trust with regard to how the beneficiaries will benefit from the trust, and to amend the trust administrative provisions. The Trust Protector has no authority, however, to amend the trust with regard to the identities of the beneficiaries.
[Section A.8] The Trust Protector acting from time to time, if any, on his or her own behalf and on behalf of all successor Trust Protectors, may at any time irrevocably release, renounce, suspend, or modify to a lesser extent any or all powers and discretions conferred under this instrument by a written instrument delivered to the Trustee.
The court found that these two clauses address different concerns. Section A.3 gave the trust protector the broad power to amend administrative provisions of the trust, and Section A.8 gave the trust protector the power to modify powers granted under the trust. The court considered A.8 to not contain language of limitation. More specifically, A.8 contained permissive language about what the trust protector may do rather than what he may only do.
Then, reading the trust as a whole, the court looked to other sections of the trust and found that, when the trustor intended to limit the trust protector’s authority, he did so explicitly. Based on these passages, the court found it implausible that the trustor intended to limit the trust protector’s broad power to amend administrative provisions by another section that grants a permissive power concerning a different subject and which itself contains no language of limitation, does not reference administrative provisions, and appears in a different section of the trust.
If a trustor wants to limit the power of the trust protector, then he should state it expressly. Conversely, if a trustor wants to be sure that the trust protector has broad powers, then she may want to consider making that explicit, too.